Bond markets near 2007 crisis levels as Healey warned minimum wage rise could tip economy over edge

From the Newshound archive · first published 26 September 2026 · last updated 27 September 2026.

Business groups and City analysts are demanding he resist a big minimum wage increase above April's rise to £12.71, warning it could stoke inflation already surging on the back of the Iran War. The Treasury is also said to be eyeing a smaller fiscal cushion than predecessor Rachel Reeves held, a move that risks further rattling investors.

Patrick Milnes of the British Chambers of Commerce warned another sharp National Living Wage rise would 'pile more pressure on firms already struggling under a huge cost stack'.

Oil prices driven up by the Iran War are adding to inflation, leaving Healey little room to offer public sector workers the pay rises Labour voters expect.

Panmure Liberum chief economist Simon French said dropping the £23.6bn headroom forecast could be offset by other market-calming measures — but only if Healey moves carefully.